Pound to Euro Forecast: GBP Dented vs EUR on Declining Germany Trade Surplus

March 12, 2025 - Written by David Woodsmith

STORY LINK Pound to Euro Forecast: GBP Dented vs EUR on Declining Germany Trade Surplus

Pound Sterling (GBP) dipped against the Euro (EUR) on Tuesday following the publication of some downbeat data releases.

At the time of writing, the Pound Euro (GBP/EUR) exchange rate was trading at around €1.1848, down roughly 0.2% from Thursday’s opening levels.

On Tuesday, the Euro (EUR) gained ground against most of its counterparts, even though Germany, the largest economy in the Eurozone, had released disappointing trade figures the previous day.

The data showed a three-month decline in Germany’s trade surplus and a steeper-than-expected drop in exports.

Despite these weak numbers, the Euro found some support on Tuesday, partly due to a weakening US Dollar (USD), given the currencies negative correlation.

On Tuesday, the Pound (GBP) edged higher against most of its peers, despite the release of some worse-than-expected mid-tier domestic data.

The UK’s BRC retail sales monitor for February came in significantly lower than anticipated, reporting a 0.9% increase instead of the expected 2.4%.

Despite this underwhelming performance, Sterling managed to strengthen against the majority of its counterparts.

Looking ahead to Wednesday, the primary driver of movement for the Pound Euro exchange rate will likely be several speeches from European Central Bank (ECB) officials, including an address by the central bank's President, Christine
Lagarde.

These speeches are crucial as they can provide valuable insights into the ECB's future monetary policy stance, and any hawkish signals from Lagarde or other ECB officials could further bolster the Euro.

This is particularly significant given the ECB's upcoming interest rate decision on Thursday, where market participants will be closely watching for any hints of a more aggressive tightening of monetary policy.

Turning to the Pound, the absence of any major domestic data releases on Wednesday means that GBP exchange rates might lack a clear directional bias.

Without fresh economic indicators to guide traders, the Pound's performance will likely be more influenced by broader market sentiment.

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TAGS: Pound Euro Forecasts